Mar 17, 2006

Former Visa CEO critical of banks abdicating the payment experience to 3rd parties

This week's American Banker quotes former Visa CEO Carl Pascarella in an article titled Payments Pressure: Why Banks' Role is at Risk.

"What was an association model owned by the banks and governed by the banks is becoming a value-based model. As the banks lose control of the associations, banks will have to become more specialized, sell even more payment services into their footprints, and use payment devices as a key to retention and cross-selling."

"I was very vocal and to some degree critical of banks getting out of the acquiring business. I believe that they were selling the customer experience at the point of transaction to third parties who didn't have an interest in the relationship. JPMorgan Chase., Bank of America., U.S. Bancorp, and Wells Fargo & Co. are the banking companies that have most clearly recommitted themselves to the payment process. I don't believe they're going to abdicate that again."

At Welcome, we see the impact of this around the world, every day. Bankers in other parts of the world have not abdicated the payment experience to others, so we are seeing more innovation outside the US in terms of payment experience enhancement. In some countries, however, bankers have gone a similar route to the US. For example, in Korea, the payment experience is completely owned by VAN's, organizations that look very much like an ISO/Processor combination.

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